Q1 2016 presentation - Euroland · Q1 2016 Q1 2015 Q1 2016 Adjusted EBIT 31,123 23,837 35,241 Adjustment for refocusing costs - (7,593) - Amortization of acquistion related IFA (4,547)

Arni Oddur Thordarson, CEO,

Linda Jonsdottir, CFO

April 26, 2016

Q1 2016 presentation

• Operations include MPS for the full quarter

• Pro forma Q1 2016 compared to pro forma Q1 2015

• Better future indicator than consolidated accounts

Pro forma operations

• MPS acquisition closed on January 29, 2016

• Q1 2016 accounts include MPS for two months

• Q1 2015 accounts are Marel stand-alone

Consolidated accounts

• Pro forma revenue for 2015 of 977m with adj. EBIT of 133m

• Management guidance is modest organic revenue and EBIT* growth

Business outlook

* Operating income adjusted for amortization of acquisition-related intangible assets (PPA). 2

Pro forma operations

• Revenue of €234 million [Q1 2015: 244m]

- Q1 2015 revenue includes €6 million in

discontinued operations

• Order intake of €254 million [Q1 2015: 259m]

• Order book €340 million [Q1 2015: 289m]

• EBIT* €35.2 million or 15.1% [Q1 2015: 14.4%]

• EPS 1.93 euro cents on a consolidated basis

[Q1 2015: 1.73]

Pro forma: 15% EBIT and record order book

Revenue

€234 million

EBIT*

€35.2 million

Order

Intake

€254 million

Order

Book

€340 million

*Adjustments in Q1 consist of a €4.5 million amortization of

acquistion related intangible assets (PPA)

4

Leading global provider in Poultry, Meat and Fish

Primary processing Secondary processing

Primary processing Secondary processing

Secondary processing

Marel presence Application gaps to reach full-line offering

Further processing

Further processing

Primary processing Further processing

• Since 1/1 2016, Marel views and manages the business as three industries; Poultry, Meat, and Fish

• Each industry operates in primary, secondary and further processing

• The vast majority of revenue and operational results in further processing relates to Poultry and Meat

5

Pro forma: Business overview

Record quarter in order intake

with good geographical and

product mix

Primary and secondary

processing delivered good

results while further processing

is still lagging in profitability

POULTRY

53% of revenue

14.3% EBIT margin

* Operating income adjusted for amortization of acquisition-related intangible assets.

MEAT

Marel, with MPS on board, is a

leading global provider in

primary and secondary

processing of meat

The plan is to step up

investments in

further processing

33% of revenue

17.8% EBIT margin*

Order intake in Salmon is at an

expected level while whitefish

and on-board are

underperforming

Roll-out of new products and

increased focus on innovation in

whitefish

Refocusing of onboard

operations in Seattle is ongoing

FISH

13% of revenue

7.4% EBIT margin

Other segments account for less than 1% of revenue. 6

Pro forma order book at end of

2015

320 million

Order book at end of Q1 2016

340 million

Order intake in Q1 2016

254 million

Revenue (booked off)

234 million

Record order book

• Maintaining the momentum with orders

received of 254 million

• Increased volume and revenue visibility

Marel

at end of

2013

132 million

Marel

at end of

2014

175 million

7

Consolidated accounts

MPS is having a positive impact on operating results

Consolidated accounts Pro forma

Q1 2016 Q1 2015 Q1 2016

Adjusted EBIT 31,123 23,837 35,241

Adjustment for refocusing costs - (7,593) -

Amortization of acquistion related IFA (4,547) - (4,547)

EBIT 26,576 16,244 30,694

Purchase Price Allocation

• Order backlog amortization of 2.9 million for February and March

• Amortization of other intangible assets 1.7 million for February and March

9

• In connection with the acquisition of MPS the

purchase price has been allocated to various

balance sheet items, including intangible

assets

• Intangible fixed assets are treated as

follows:

- Goodwill: Impairment test only, no linear

amortization

- Long-term intangibles: Technology, IP and

customer relations amortized over 20 years

- Short-term intangibles: Order backlog

amortized by mid-year 2017

• All figures are provisional and subject to

potential adjustments in next quarters

PPA: Allocation of intangible fixed assets

10

Goodwill 245m

Technology 54m

Customer relations

118m

Other 3m

Order backlog

24m

Allocation of intangible fixed assets

EUR thousands Q1 2016 Q1 2015 Change in %

Revenue ............................................................................................................................... 220,631 209,311 5.4

Gross profit ........................................................................................................................... 92,607 81,464 13.7

as a % of revenue 42.0 38.9

Before PPA

Result from operations (EBIT) ............................................................................................ 31,123 23,837* 30.6

as a % of revenue 14.1 11.4

EBITDA ................................................................................................................................ 38,185 36,871* 3.5

as a % of revenue 17.3 17.6

After PPA

Result from operations (EBIT) ............................................................................................. 26,576 16,244 63.6

as a % of revenue 12.0 7.8

EBITDA ................................................................................................................................ 38,185 29,393 29.9

as a % of revenue 17.3 14.0

Net result .............................................................................................................................. 13,752 12,620 9.0

Consolidated: Includes MPS from January 29, 2016

* Results are adjusted for refocusing costs related to the refocusing program Simpler, Smarter, Faster. 11

0%

5%

10%

15%

20%

0

5

10

15

20

25

30

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2014 2015 2016

EU

R m

illi

on

s

EBIT EBIT as % of revenue

On track towards best in class profitability

* Operating income adjusted for amortization of acquisition-related intangible assets (PPA).

Adjusted EBIT in 2014: 6.8% Adjusted EBIT in 2015: 12.2% EBIT* in

Q1 2016: 14.1%

12

Consolidated: Balance sheet

ASSETS (EUR thousands) 31/3 2016 31/12 2015

Non-current assets

Property, plant and equipment ........................................................................................................... 109,172 89,005

Goodwill ............................................................................................................................................. 634,542 389,407

Other intangible assets ...................................................................................................................... 300,387 107,018

Receivables ....................................................................................................................................... 337 443

Deferred income tax assets ............................................................................................................... 9,539 10,029

1,053,977 595,902

Current assets

Inventories ......................................................................................................................................... 118,813 99,382

Production contracts ......................................................................................................................... 40,559 17,261

Trade receivables .............................................................................................................................. 114,808 99,696

Assets held for sale ........................................................................................................................... - 3,799

Other receivables and prepayments .................................................................................................. 39,914 29,139

Cash and cash equivalents ................................................................................................................ 31,273 92,976

345,367 342,253

Total assets 1,399,344 938,155

13

LIABILITIES AND EQUITY (EUR thousands) 31/3 2016 31/12 2015

Equity 463,872 446,739

LIABILITIES

Non-current liabilities

Borrowings ......................................................................................................................................... 493,157 217,287

Deferred income tax liabilities ........................................................................................................... 67,064 15,943

Provisions ......................................................................................................................................... 6,576 6,943

Derivative financial instruments ........................................................................................................ 8,859 3,057

575,656 243,230

Current liabilities

Production contracts.......................................................................................................................... 142,124 78,330

Trade and other payables ................................................................................................................. 170,594 139,227

Derivative financial instruments ........................................................................................................ 100 -

Current income tax liabilities ............................................................................................................. 5,532 3,221

Borrowings ........................................................................................................................................ 24,140 18,449

Provisions ......................................................................................................................................... 17,326 8,959

359,816 248,186

Total liabilities 935,472 491,416

Total equity and liabilities 1,399,344 938,155

Consolidated: Balance sheet

14

Change in net cash

Net cash at start of Q1 2016

93.0

million

Acquisition of

MPS

368.4 million

Net cash at end of Q1 2016

31.3

million

Taxes paid

1.5

million

Investing activities

9.8

million

Net finance cost*

7.0

million

Dividends paid

10.3

million

Cash generated

from operating activities

27.9

million

Sale of treasury shares

16.3

million

Proceeds from

assets held for

sale

3.7 million

Net proceeds from

borrowings**

287.4 million

15

* Including one-off cost related to repayment of

junior facility 2.4 million.

** Net Proceeds from new 670 million facility net of

capitalized fees, related to borrowings.

Free cashflow

16.6 million

• Parallel to the acquisition of MPS, Marel secured and

closed long-term senior financing

- Successful transaction was completed with oversubscription

from a diverse group of international banks

• The approximately €670 million senior loan facilities

have a maturity in November 2020

- The financing is at favorable terms in line with Marel's

financial strength and current market conditions

• Initial interest terms are EURIBOR/LIBOR + 275 bpoints

- Which will vary in line with Marel’s leverage ratio

- 2.9x Net debt / Adj. EBITDA at end of Q1 2016

Long term financing closed in Q1 2016

Eight strong banks support

Marel operations

16

Outlook

Pro forma: More balanced business

Revenue Q1 2016 EBIT* Q1 2016

Poultry 53% Meat

33%

Fish 13%

Other 1%

Poultry 50%

Meat 39%

Fish 7%

Other 4%

18 * Operating income adjusted for amortization of acquisition-related intangible assets.

Marel sales/service office and agents

MPS sales/service office

• During Q1 the integration plan has been

shaping up and initial plans are starting to roll

out

• The focus in 2016 is on:

- Capturing cross- and upselling opportunities by

integrating the sales and service organizations

and leverage on the complimentary geographic

presence

- Synchronizing financials by adapting MPS’

accounts to IFRS and allocating the purchase

price

- Rationalizing procurement

• Second phase of the integration will focus on

branding and corporate identity, synchronizing

manufacturing and the IT landscape

- The overall integration is expected to take

around three years

Integration of MPS going according to plan

Global sales and service network

19

Strong manufacturing platform for full potential

Seattle

Gainesville

Gardabaer

Aarhus

Nitra

Piracicaba

Multi-industrial

manufacturing

sites

Colchester

Specialized

manufacturing

Stovring Boxmeer/

Dongen

MPS manufacturing

Beijing

Lichtenvoorde

20

Unadjusted EBIT in

Q1 2015

16.2 million

Adjusted EBIT in

Q1 2015

23.8 million

Pro forma EBIT* in Q1 2016

35.2

million Adjustment

for refocusing

costs

7.6 million

Increase in EBIT between

years

11.4 million

Solid operating income improvement

Focus on value creation

* Operating income adjusted for amortization of acquisition-related intangible assets (PPA).

• MPS acquisition completed without

issuing new shares

• 2.9x Net debt / EBITDA at end of Q1

2016 in line with targeted capital

structure

• Earnings per share of 1.93 euro cents

compared to 1.73 euro cents in Q1

2015

- EPS based on consolidated accounts

with MPS operational results and finance

cost only for 2 months

- Non-recurring financial cost in relation to

refinancing of 2.4 million in Q1 2016

21

Pro forma FY2015

Revenue €977m

Adj. EBIT €133m

Order book €320m

Business Outlook 2016

Taking into account the order book and

delivery time of projects to customers,

increase is foreseen in revenue over the

course of the year. Management reaffirms

guidance of modest organic revenue

growth and increase in EBIT* between

years compared with last year pro forma

result of 977 million revenues and

adjusted EBIT of 133 million.

Pro forma Q1 2016

Revenue €234m

EBIT* €35.2m

Order book €340m

* Operating income adjusted for amortization of acquisition-related intangible assets (PPA).

Thank you